BMW Plans to Double Engine-Production Capacity in China

BMW and its joint-venture partner Brilliance China Automotive Holdings Ltd. plan to make as many as 400,000 engines a year at a new facility in Shenyang, the Munich-based carmaker said in a statement to Bloomberg News in response to questions. Photographer: Nelson Ching/Bloomberg

Feb. 25 (Bloomberg) -- Bayerische Motoren Werke AG is
expanding engine production in China to potentially double
capacity as it seeks to close the gap with Audi in the world’s
largest car market.

BMW and its joint-venture partner Brilliance China
Automotive Holdings Ltd. plan to make as many as 400,000 engines
a year at a new facility in Shenyang, the Munich-based carmaker
said in a statement to Bloomberg News in response to questions.
The expansion includes a foundry as part of its push to boost
local content.

BMW, the best-selling luxury-car brand globally, trails
Audi in China. The additional capacity will help BMW lower
shipping costs and avoid taxes on imports. It will also reduce
exchange-rate risks for the German manufacturer. BMW’s sales in
China rose 20 percent to 391,000 vehicles, while Volkswagen AG’s
Audi delivered 492,000 cars, a gain of 21 percent.

The new plant will be located next to a BMW assembly plant
in Shenyang’s Tiexi district and replace an existing facility
there. It will produce four-cylinder gasoline engines for
locally built cars and start production in 2016 with initial
capacity for 200,000 units, BMW said. Capacity will rise to
300,000 units a year in the “medium term” and can be expanded
to 400,000 if needed, the carmaker said.

The engine expansion roughly mirrors plans for auto
assembly in China. BMW plans to increase production capacity
there to as many as 400,000 vehicles in the coming years from
200,000 this year.

Chinese Motors

BMW restricted engine-making to Europe until 2012, when it
established the first production facility in Tiexi. The plant
supplies engines to the car-assembly facilities of BMW’s joint
venture with Brilliance in Shenyang’s Dadong and Tiexi
districts.

Other German carmakers have also moved to make engines in
China. Daimler AG’s Mercedes-Benz opened its first car-engine
factory outside its home country in November. The plant cost 400
million euros ($550 million) and has initial capacity to produce
250,000 motors per year. It manufactures four- and six-cylinder
engines.